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Ofgem recently released a video that helps explain the ‘safeguard tariff’, who it applies to, how long it lasts and how prices are set for it.
In this blog post we at Energy Angels are going to break down the video into smaller chunks for easier understanding. We will go into what the tariff is, why it was introduced, who it applies to, who it doesn’t and if it will save you money.
So here we go…
What is the safeguard tariff?
Essentially the safeguard tariff puts a cap on how much a supplier can charge per kWH. Suppliers cannot charge more than the Ofgem set level, and therefore must look set their prices below it. The aim of this tariff – to protect consumers from being overcharged.
Suppliers must automatically ensure they charge you below the safeguard tariff if you qualify. Therefore, there is no need to worry about an ‘opt in’ process.
Why was it introduced?
The safeguard tariff was introduced as The Competition and Markets Authority found prepay customers have fewer tariff choices.
They also found that prepayment customers are more likely to be in vulnerable circumstances. Furthermore disadvantaging them in the marketing compared to none prepaid customers.
On 2nd February 2018, Ofgem have further extended the tariff to cover another one million more households.
Who does it apply to?
The safeguard tariff applied to you if:
- You pay for your gas or electricity in advance using a prepayment meter.
- Are on an energy tariff requiring prepayment.
- Have a standard meter, ‘first gen’ smart meter, restricted meter or dynamically teleswitched meters in Scotland.
- Receive the Warm Home Discount
Who does it not apply to?
The safeguard tariff does not apply if your prepayment smart meter can continue to fully work its smart functionality if you switch supplier.
Will your bills fall?
The safeguard tariff doesn’t cap the cost of your total bill. This is because the amount you pay also depends on how much gas or electricity you use. Therefore, your bill under the tariff depends on the following things:
- The supplier you’re with.
- The tariff you’re on.
- How much energy you use.
- The kind of prepayment meter you have.
You can still reduce your bills?
The safeguard tariff is designed to give you peace of mind, ensuring you are paying a fair price for your energy. But you can still save money and reduce your bill by shopping around. When switching look towards a fixed tariff to cut your bill prices even further.
If you are interested in seeing how much you could cut your bills by then try out quick and easy Gas and Electricity Personal Projection tool today.